On January 1, 20X5, Pond Corporation purchased 75 percent of Skate Companys stock at underlying book value.

On January 1, 20X5, Pond Corporation purchased 75 percent of Skate Company’s stock at underlying book value. At that date, the fair value of the noncontrolling interest was aJanuary 1, 20X8, and December 31, 20X8, and income statements for 20X8 were reported as follows:

Additional Information
1. Pond sold a building to Skate for $65,000 on December 31, 20X7. Pond had purchased the building for $125,000 and was depreciating it on a straight-line basis over 25 years. At the time of sale, Pond reported accumulated depreciation of $75,000 and a remaining life of 10 years. Assume Pond uses the fully adjusted equity method.
2. On July 1, 20X6, Skate sold land that it had purchased for $22,000 to Pond for $35,000. Pond is planning to build a new warehouse on the property prior to the end of 20X9.
3. Skate issued $100,000, par value 10-year bonds with a coupon rate of 10 percent on January 1, 20X5, at $95,000. On December 31, 20X7, Pond purchased $40,000 par value of Skate’s bonds for $42,800. Both companies amortize bond premiums and discounts on a straight-line basis. Interest payments are made on July 1 and January 1.
4. Pond and Skate paid dividends of $30,000 and $10,000, respectively, in 20X8.

Required
a. Prepare all elimination entries needed at December 31, 20X8, to complete a three-part consolidation worksheet.
b. Prepare a three-part worksheet for 20X8 in goodform.

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20X8 Balance Sheets Pond Corporation Skate Company January 1 S 57,600 130,000 December 31 S 53,100 January 1 December 31 0 Accounts Receivable Interest & Other Receivables 50,000 400,000 (150,000) 240,000 Buildings & Equipment Accumulated Depreciation Investment in Skate Company: 400,000 2 (94,000) (185,000) 139,050 134,000 122,100 Investment in Tin Co. Bonds Total Assets 135,000 5927 250 $994 550 $320,000 340,000 Accounts Payable Interest & Other Payables Bonds Payable Bond Discount Common Stock Additional Paid-In Capital Retained Earnings Total Liabilities & Equities 4 40,000 300,000 155,000 222,500 155,000 279,550 $994 550 170,000 340,000 $320,000 20X8 Income Statements Pond Corporation Skate Company $450,000 24,450 $250,000 Income from Skate Co Interest Income Total Revenue Cost of Goods Sold Other Operating Expenses 50,000 Depreciation Expense $492,950 $250,000 $285,000 $136,000 Miscellaneous Expenses 11,900 $405,900 9,500 $220,000 2 2 S 87,050